Modesto officials consider spending $380,000 for downtown hotel project

The City Council on Tuesday could set aside nearly $381,000 to cover Modesto’s costs to explore the potential development of a 200-room, high-end hotel that is expected to bring more visitors and conventions to downtown.

While Modesto does have a $59,300 consultant’s study that says the hotel is feasible if several conditions are met, the city does not have a developer with a plan to build one. So that raises the question of why the council could authorize spending money for something that may not happen.

“I haven’t been briefed and have not yet looked at the staff report,” Mayor Ted Brandvold said in a Monday phone interview. “It will be up to the council to determine whether it’s something they want to pursue. (The hotel) could be a good investment for the city.”

The staff report details $380,880 in spending, including $60,000 for a study to look at expanding the city’s three downtown parking garages to provide parking for the hotel, $170,000 for legal work, and $116,700 for a consultant that would help the city find a developer and then negotiate an agreement with him.

The staff report states it would take Modesto about 18 months to complete all this and other work. Brandvold said if the council approves setting aside the $380,880 that does not mean the city is committed to spending all of it. He said the spending would stop as soon as the city learned the project would not work.

“I believe at any time we could pull the plug,” he said.

The City Council’s decision Tuesday is the latest step in Modesto considering the development of a hotel in Modesto Centre Plaza’s 1.5-acre parking lot, which is bounded by 11th, K and L streets. The hotel would complement the 258-room DoubleTree by Hilton, which is connected to Centre Plaza.

Modesto hired Chicago-based HVS Convention, Sports & Entertainment Facilities Consulting to conduct the hotel study. HVS concluded a 200-room, high-end hotel is feasible if several conditions are met.

They include a developer being able to build the hotel at no more than $37.2 million (anything above that could require the city’s financial help) and that Modesto Centre Plaza, which has been the city’s convention-community center for three decades, is renovated. The hotel also would need parking, and the $37.2 million does not include that.

The city estimates the Centre Plaza renovations would cost $3.2 million, and it would have to find a way to pay for them if the project moves forward. The consultant’s study says an upgraded Centre Plaza is necessary to draw more conventions and conferences and generate more room nights at the DoubleTree and new hotel.

But city officials have said these and other costs would be part of the negotiations with a developer if the project reaches that stage.

Modesto has talked about the potential redevelopment of the Centre Plaza parking lot for many years. The latest effort comes after Councilman Tony Madrigal, Mayor Brandvold and city staff met with a developer a couple of years ago. Madrigal had made the initial contact with the developer.

Officials have not provided the developer’s name.

Proponents said the hotel could be another key piece in revitalizing downtown. HVS managing director Tom Hazinski told council members in May that the hotel would be expected to create 106 jobs (not all would be with the hotel), $8.6 million in new annual spending and $1.2 million in annual taxes.

Brandvold is cautiously optimistic about the project. He said there is the potential to tweak it to make it work, including an option that includes adding professional offices and making it a mixed-use development. He said he was approached about that possibility about six weeks ago by someone representing a company from outside of the area.

He stressed that while Modesto could offer incentives for the project, it cannot subsidize it. “I don’t want to get the citizens involved in a situation of their carrying the bill for this,” he said.

The council meets at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St.

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Kevin Valine covers local government, homelessness and general assignment for The Modesto Bee. He is a graduate of San Jose State University and grew up in San Jose.